Concerns arose when the Debt Management Office (DMO) revealed that Nigeria’s public debt had reached N121.67 trillion, consisting of N65.65 trillion domestic debt and N56.02 trillion external debt. The alarm raised questions about the country’s ability to manage its debt, especially with ongoing challenges in revenue generation and the high percentage of funds allocated to debt servicing. In the first quarter of 2024, the federal government’s revenue fell significantly short of its budget, while a substantial amount was allocated to debt servicing.
DMO warned that Nigeria’s debt was becoming unsustainable, exceeding recommended thresholds for debt service-to-revenue and debt-to-GDP ratios. Prof. Godwin Oyedokun acknowledged the moderate debt-to-GDP ratio but highlighted the risks of rapid debt accumulation without adequate revenue. Eze Onyekpere criticized the mismanagement of the economy, citing a rise in debt-to-revenue ratio and lack of tangible infrastructure development despite borrowing.
While acknowledging the necessity of borrowing, Dr. Muda Yusuf emphasized the importance of boosting oil and gas output to reduce reliance on loans. The looming debt crisis emphasizes the urgency for the Nigerian government to address revenue generation and debt management to avoid future economic challenges.